Where will the second half of 2022, and even 2023, take us? The Wells Fargo Investment Institute, believes the economic cycle will run faster, interest rates will rise further, and the economy and capital markets will remain fragile in the months ahead as we likely head toward a moderate recession.
Uncertain about how to respond or what actions to take next? Let’s start by unpacking what this forecast means for both your investments and your wallet.
PREPARE, DON’T PANIC
If you feel anxious just hearing the word “recession,” keep in mind that recessions are a natural part of every economic cycle. In our Wells Fargo Investment Institute Midyear Outlook, we discuss the hallmarks of a recession, how long and deep this moderate one may be, and what Federal Reserve actions may affect the job market and interest rates.
FOCUS ON THOUGHTFUL DECISION MAKING
When you hear about a recession, you might feel the need to take action in the moment, like flipping a light switch. Our recommendation is for a “dimmer switch” approach for equity portfolios and more, along with talking to a professional advisor to assess your needs vs. wants.
TAKE STOCK OF YOUR PRIORITIES AND OPTIONS
Even if you don’t have a big investment portfolio, now is an opportunity to reflect on the quality of your investments and make sure you’re making the right decisions, financially and psychologically. It’s time to review the Great Resignation, how much cash you should have on hand, and consider the risk of trying to time the markets.
EXPLORE INSIGHTS AS YOU PREPARE
For help determining what to do with your portfolio while facing the unknowns of the remainder of this year and beyond, visit the WFII site at wellsfargo.com/investment-institute.
Hope this helps shine the light on what to expect when you are expecting a recession.
Darrell Cronk is the chief investment officer for Wells Fargo Wealth & Investment Management.